The British election – it’s the economy stoopid!

Britain will go to the polls on Thursday 6 May.  The campaigns of the major parties are under way and the usual ‘scandals’ and ‘revelations’ are coming to the surface, whether it is Gordon Brown’s bullying behaviour to his staff or Lord Ashton’s economics with the truth over his ‘offshore’ tax status as the main financier of the Conservative party.

But this election will be one or lost – as most are – on the voters’ views of the state of economy.  And it ain’t good.

The British economy remains very weak and unable yet to sustain any economic recovery after the Great Recession.  Inequalities of income, status and wealth are no better than they were when New Labour came to office back in 1997 – and in many instances things are worse.  Wages are stagnant and falling in real terms, unemployment is up sharply, public services and infrastructure (excluding maybe schools and hospitals) are in tatters.  House values for the two-thirds of households that have borrowed mortgages have plummeted and household debt remains at over 100% of income.  And worse, the government of the day is now saddled with a level of debt relative to annual output and public sector revenues not seen since the Second World War.

That’s why New Labour is most likely to be defeated in May – it can hardly win on its record!  Its only hope is that enough voters will think that the Conservatives will make it even worse.  But that’s not a very convincing message.  Certainly, historically, it hardly ever works.

The Conservatives won three elections with increased majorities from 1951 to 1964 because the economy boomed and prime minister Harold Macmillan in the 1959 could claim in the campaign that voters “had never had it so good”.  However, the first major economic recession since 1947 that happened in 1960 sowed the seeds of the Conservative defeat (narrow as it was) in 1964, as voters no longer thought they had it so great.

The Labour government was able to get re-elected with a bigger majority in 1966 on the back of an economic boom in the mid-1960s, but after another slump in 1969-70, Labour was defeated by Edward Heath’s Conservatives.  Then the first worldwide economic slump of 1974, which brought the UK economy to its knees and provoked a major industrial dispute, put paid to the Conservatives and Labour won two elections in 1974 and then lived off the economic boom of 1974-79.

But British capitalism was weak and feeble during the 1970s and was forced to turn to the IMF for money under draconian conditions in 1976.  That led to Labour leader Jim Callaghan who succeeded Harold Wilson in mid-term (like Gordon Brown succeeded Tony Blair) to face a ‘winter of discontent’ in 1978-9 that heralded a new economic slump.   The Conservatives came back to power under Margaret Thatcher in May 1979 – they were to stay in office for the next 18 years.

As Thatcher presided over the worst economic slump between 1980-2 that the advanced capitalist economies had then seen since the 1930s, her popularity plummeted.  It is an irony of history that she would have lost in 1983 if it had not been for one thing (the Falklands war).  Petty patriotism gave the Conservatives a lifeline along with economic recovery from 1982 onwards.

The economic slump of 1991-2 came after Thatcher’s exit in 1990 and John Major was left holding the damaged baby.  Somehow he scrambled a victory in 1992 (the 1991 recession in the UK was relatively mild), while George Bush went down to defeat (“because of the economy stupid”), despite the ‘patriotic’ first Iraq war.

New Labour and Tony Blair were lucky.  New Labour should have won in 1992 but eventually they came into office in an economic boom which was hardly dented by the mild economic recession of 2001.  Victory in 2002 followed and the subsequent economic boom from 2002 to 2007 enabled a third victory.

Gordon Brown is not so lucky.  For that reason, he will most likely be defeated.  Some say that maybe there will be a hung parliament without any clear majority for either major party – and the latest opinion polls do suggest that.  I still think it is unlikely, but if it does happen, a hung parliament will not last long under the British electoral system.  The hung parliament of March 1974 was quickly corrected in October 1974 with a new election.  That is what would happen this time.

In my book, The Great Recession (available from, especially Chapters 12 and and 36, I argue that political trends are correlated with cycle of profit.  If capitalism is in a healthy trend, with profitability rising and economic recessions mild and infrequent, openly capitalist parties tend to have political power and rule with confidence (Thatcher and Reagan through the 1980s; Churchill, Eden and MacMillan in the 1950s).  In periods when profitability is falling and recessions are deep and more frequent, reformist or ‘liberal’ parties take office as the electorate loses confidence in capitalism and seeks change (Kennedy and Johnson in the US; Harold Wilson in the UK of the 1960s; Obama now).

That would suggest that the Conservatives will not win this May.  But probably the bigger factor this time is that New Labour never represented a clear reformist alternative and has presided over the worst calamity for capitalism since the 1930s.

There is another most depressing forecast that could flow from correlation between the profit cycle and the political cycle.  The advanced capitalist economies are still in a down phase of the profit cycle that will last until 2015 at least and at least another economic recession will be necessary to ‘cleanse’ the capitalist production process from an “overaccumulation of capital” (i.e. too many workers and too much old technology to make a profit).

But before that happens, there is likely to be an economic boom for next five years or so.  So if the Conservatives win in May, they could be set fair to win again in 2014-5, before another economic tsunami sweeps over the British economy.  So it could be two terms for Cameron before the deluge.


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